In a perfect world, your small business's products and services would be so valuable and unique that all you need to do is sit back and rake in money. Alas, we live in an imperfect world. As Shakespeare wrote, "Roses have thorns, and silver fountains mud; clouds and eclipses stain both moon and sun."
You can't afford to wait for customers to decide on their own to make a purchase. Instead, you must generate your own sales leads and shepherd the most viable and valuable ones through your sales funnel. Let’s go over the different lead types and a five-step process for finding leads at your small business.
Overview: What is lead generation?
Lead generation is the process of identifying potential customers for your business’s products or services. While marketing casts a wide net to create public awareness, generating business leads usually begins after potential buyers express interest in a company's offerings.
This demonstrated interest includes participating in a survey, asking a question at a sales booth at an industry trade show, or signing up to receive a newsletter or free download.
The 5 different types of leads
While you may categorize leads by their status — cold, warm, or hot — sales leads are generally differentiated as inbound or outbound.
Marketing that attracts visitors to your website produces inbound leads, and proactively contacting prospects creates outbound leads. Inbound and outbound leads are further broken down into the following categories.
1. Information qualified lead (IQL)
IQLs have given you their contact information in return for content such as a white paper, best practices checklist, or webinar. These prospects are likely beginning their research process and may know little or nothing about your company or its products and services.
2. Marketing qualified lead (MQL)
MQLs have demonstrated interest in your company's offerings by downloading product information, talking to a sales rep at a convention, or asking a question via live chat or chatbot. MQLs are considered sales-ready but are still not at the point of talking to a sales rep.
3. Sales qualified lead (SQL)
MQLs become SQLs by expressing direct interest in your products such as signing up for a software demo or scheduling an appointment with a sales rep. A MQL may also convert to an SQL when your sales team vets them by industry, position, and decision-making and/or budgetary authority.
4. Product qualified lead (PQL)
PQLs have used your products or services through a free trial or freemium model. Your sales team can get in touch with PQLs once they've had time to see the value in your products or after they've asked questions about features or functionality available through a one-time purchase or subscription.
5. Service qualified lead
Service qualified leads are your existing customers and are similar to PCLs because they have experienced the value of one or more of your company's offerings.
These leads are especially valuable because service qualified sales, whether through upselling or additional products, have a greater percentage of success than acquiring new customer business.
How to start generating leads for your company
A steady stream of viable sales leads is critical to expand your business. Follow these five steps to integrate the software, marketing, and lead-scoring processes for business success.
Step 1: Use customer relationship management (CRM) software
Different CRM types aggregate information from multiple sources so your sales and marketing teams can leverage it to maximum effect.
CRM tools aiding the lead management process include:
- Prospect/customer accounts
- Unified communications
- Lead scoring
Salesforce, a CRM software industry leader, has an account interface that compiles relevant customer information: contact details, company website, topics discussed, next steps, and account owner. Every employee who accesses it knows exactly what is going on and doesn't work at cross purposes or duplicate efforts.
Your sales process will remain inefficient without CRM software. After all, what's going to produce better results — a unified set of online customer records or a collection of emails across multiple employee accounts, to-do lists written on desk calendars, and phone numbers scribbled on the backs of business cards?
Step 2: Create buyer personas
When I was a book publisher, I regularly reviewed book proposals. I would ask each author to identify the book's primary target audience, and I could tell they hadn't done their research when the answer was "everyone."
No product is relevant to everyone, and to maximize sales, focus on the defined subset of the most lucrative potential customers.
You know your customers' basic characteristics — industry, company size, job title, budget — but take this a step further with buyer personas, or detailed fictional characters who represent your ideal customer types. Buyer persona elements include:
- Demographics, including age, gender, location, salary, education, and family size
“Stan,” the heavy equipment buyer persona below, contains detailed information about his success factors, decision criteria, and buyer's journey.
Creating buyer personas requires hard data, not suppositions or best guesses. Use the granular customer information in your CRM's database to empirically define each buyer persona.
Step 3: Market to your target audience
Once you define your target customers, now you can focus your marketing efforts. In the past, this meant physically contacting prospects — industry trade shows, cold calls, or outside sales — but many of these efforts have transitioned online through website design, content marketing, and social media outreach.
Online marketing techniques include:
- Website landing pages with a call to action (CTA)
- Opt-in forms for an email newsletter or white paper download
- Active presence on industry forums and social media channels
While prospecting activities and lead generation strategies cast a wide net, you're not operating blind regarding their results. Each marketing type has its own metrics to track performance, whether it's CTA click-through rates or an email newsletter's month-over-month subscriber growth.
Step 4: Score your leads
All leads are not created equal, so you must score and qualify the leads that are potentially the most lucrative and have the highest probability of resulting in a deal. Take subjectivity out of the process: Identify key data points to measure and assign a point value to each one to score leads.
Common lead scoring data points include:
- Pages viewed: Visiting a pricing page scores higher than an employment page.
- Site searches: Rank visitor search engine terms.
- Downloads: Shows where visitors are in the buying cycle.
- Email actions: Track opens and click-throughs.
- Landing pages: Indicates which products or services visitors are interested in.
- Webinars: Topics viewed can indicate customer pain points.
Freshsales CRM software uses built-in artificial intelligence (AI) that analyzes explicit and implicit data to score leads. You can also customize its lead scoring rules to better identify and target new leads.
Step 5: Measure your results
Measuring your lead generation results is critical to calculate return on investment (ROI) and identify what's working well and what needs improvement. Once again demonstrating its value, your CRM can track and analyze this information.
Lead generation performance metrics include:
- Lead conversion rate: Percentage of website visitors and other contacts who convert to leads
- MQLs-to-SQLs: Percentage of MQLs who convert to SQLs
- SQLs-to-deals: Percentage of SQLs who result in deals
- Average deal size
- Cost per lead (CPL): Marketing spend divided by number of leads in a defined time period
- Time to conversion: Average time to convert visitors to MQLs in a defined time period
The optimal direction for each metric to trend is evident — your lead conversion rate should go up while CPL goes down — but these numbers don't exist in isolation. Beyond tracking your past and current performance, to see how you're doing compared to your competitors.
For example, it's important to know CPL in the information technology industry is $208, but it drops to $132 in the business services sector.
Make your business's future with lead generation
Successful sales prospecting generates leads, scores those leads to focus your efforts, and helps move them through your sales funnel. To paraphrase the Bard of Avon, it's not the stars that control your business's destiny; instead, that power lies with you — and your CRM.